Micron is set to report earnings after the close of regular market trading today.
Wall Street analysts are expecting the company to report earnings of $1.51 per share on revenues of $5.4 billion for the quarter ended in May. For the current quarter ending in August, current Street consensus is for earnings of $1.57 per share on revenues of $5.6 billion.
For the company's fiscal year ending August 2017, current Street estimates are for earnings of $4.31 per share on revenues of $19.6 billion. For next fiscal year, the Street is expecting earnings of $5.25 per share on revenues of $21.5 billion.
Most analysts on the Street are expecting Micron to beat estimates and also raise guidance going forward.
The million dollar question is whether that "beat and raise" is built in at current levels. Micron shares are up almost 132% in the last year and are also higher by just under 45% in 2017 thus far.
On the flip side, trading at a mere 7.5x estimated earnings for 2017 and at a paltry 6x estimated earnings for fiscal 2018, Micron is cheap as chips (forgive the pun) at the moment.
The darksiders are wailing about how the demand for NAND and DRAM is fleeting and all shareholders should "head for the hills and hide" which is the same tired, old mantra they have been cawing about when the Nasdaq was lower by 2,000 points and Micron was trading in the single digits.
My take is somewhat diametrically opposed. With NAND and DRAM chips finding increasing utility in a variety of existing applications/devices and with there being no signs of newer devices using those chips coming to market, there will continue to be strong demand going forward.
So, the next issue is supply. At the moment it is widely known that current supply is unable to keep up with demand. There is also a lot of noise about the Chinese and the Koreans flooding the market with chips soon and I expect that will turn out to be just noise. Like it usually does.
Having said that, I took my July OTM paper off the table for a 50% gain or so just yesterday but continue to be invested in the August OTM calls.
Today's action in the underlying will determine my moves in the position (if any) ahead of the earnings report tonight is concerned.
(Long mu calls)